Aeroplan to acquire Nectar Program Operator, LMG, to create the global leader in loyalty management



    MONTREAL, CA and LONDON, UK, Dec. 3 /CNW Telbec/ Aeroplan Income Fund
"Aeroplan" (TSX: AER.UN), Canada's premier loyalty marketing company, today
announced that it has entered into a definitive agreement to acquire
privately-held LMG for a purchase price of (pnds stlg)350 million
(Cdn$717.5 million) plus working capital adjustments of (pnds stlg)18 million
(Cdn$36.9 million) for total consideration of (pnds stlg)368 million
(Cdn$754.4 million). The purchase price is subject to a holdback in the amount
of (pnds stlg)31.6 million (Cdn$64.8 million), the future payment of which is
subject to the outcome of the company's outstanding Value Added Tax (VAT)
litigation. This transaction is expected to close by the end of the year. LMG
is being acquired from Sir Keith Mills (Chairman of LMG), global private
equity investor Warburg Pincus and the management team.
    LMG is the leading loyalty marketing and customer-driven insight and
analysis company that owns and operates the Nectar loyalty program in the
United Kingdom. LMG operates in three main areas: Nectar, Insight &
Communications (I&C) and Loyalty International. Nectar is the UK's largest
customer rewards program with 50% of UK households participating at 15 leading
national retail brands.  LMG I&C uses customer data to provide retailers and
consumer packaged goods companies (CPGs) with insight into consumer shopping
trends to enhance trading and marketing decisions. LMG's international arm
actively seeks to launch and operate loyalty programs worldwide.
    "This announcement marks an important milestone in our stated acquisition
strategy," said Rupert Duchesne, President and CEO of Aeroplan, in the UK
today. "The acquisition of LMG gives us unparalleled breadth of retail,
financial services, travel, as well as data analytics skills and experience.
Through this transaction, we will assume a dominant position in one of the
most important and active loyalty markets in the world whilst acquiring
expertise that will help accelerate our retail expansion in Canada. What's
more, Aeroplan has found the right partner to pursue successfully
international expansion opportunities. LMG's management team has significant
experience in global markets, having launched and operated retail-based
coalition loyalty programs in the UK, Canada, Spain, the Netherlands, the
Middle East and New Zealand."
    For LMG, the acquisition will bring increased financial strength as a
result of being part of a larger publicly traded entity, as well as additional
skills and expertise in complementary business sectors. Consequently, the
transaction will act as a catalyst to accelerate the execution of LMG's
large-scale plans.
    "We look forward to working with a leader in loyalty management who
brings substantial experience in the travel and financial sectors and a
long-standing history of growth," said Alex Moorhead, CEO of LMG. "Over the
last 18 months, we have been strengthening our position in the UK loyalty
arena, deepening our customer insight and analytics expertise and progressing
international opportunities. Our combined experience will ensure a worldwide
leadership position in this growing market."
    The two loyalty programs, Nectar and Aeroplan, will continue to be
operated separately. Members' participation in their respective program is
unaffected.
    As previously disclosed, Aeroplan continues to consider its plans to
convert to a corporate structure, although no final decision has been made at
this time.

    Transaction Highlights
    
    - Transaction price of (pnds stlg)350 million (Cdn$717.5 million) plus
      working capital adjustments of (pnds stlg)18 million (Cdn$36.9 million)
      for total consideration of (pnds stlg)368 million (Cdn$754.4 million).
      The purchase price is subject to a holdback in the amount of
      (pnds stlg)31.6 million (Cdn$64.8 million), the future payment of which
      is subject to the outcome of the company's outstanding Value Added Tax
      (VAT) litigation.
    - Substantially all of the transaction price will be payable in cash at
      closing with certain members of LMG's management exchanging a portion
      of their LMG shares for Aeroplan units.
    - The acquisition is expected to be immediately, modestly accretive to
      Distributable Cash in 2008.
    - Aeroplan will finance the acquisition through a combination of existing
      cash resources and debt.
    - Closing is expected to take place prior to the end of the year.
    - RBC Capital Markets acted as financial advisor to Aeroplan in this
      acquisition and has provided the debt financing necessary to complete
      the transaction.
    - Rupert Duchesne will remain President and CEO of Aeroplan. Alex
      Moorhead and his executive team will continue the management of LMG.
    

    Analyst Conference Call and Audio Webcast

    Aeroplan and LMG will hold an analyst call at 8h30 a.m. Eastern Time
(13h30 GMT) on Monday, December 3, 2007. Please allow 15 minutes to be
connected to the conference call. The call may be accessed by dialling:

    International: 416-644-3430
    North America: 866-250-4665
    United Kingdom: 00 800 2288 3501

    The call will be simultaneously audio webcast at
http://w.on24.com/r.htm?e=98788&s=1&k=311CE8FE131DE41C4B738EC3363C3ACE.

    Replay will be available for 60 days by calling:

    International: 416-640-1917
    North America: 877-289-8525
    Passcode: 21255320#

    Media Conference call

    Aeroplan and LMG will hold a media call at 10h30 a.m. Eastern Time
(15h30 GMT) on Monday, December 3, 2007.  Please allow 15 minutes to be
connected to the conference call.  The call may be accessed by dialling:

    International: 416-644-3431
    North America: 866-250-4877
    United Kingdom: 00 800 2288 3501

    Replay will be available for 60 days by calling:

    International: 416-640-1917
    North America: 877-289-8525
    Passcode: 21255327#

    Note to Editors:

    The group's ownership is split between Sir Keith Mills, Chairman of LMG,
global private equity firm Warburg Pincus and the management team.
    Chairman of LMG, Sir Keith Mills, said, "This announcement marks an
exciting milestone in the development of LMG. The company has grown rapidly in
recent years and the Nectar program has become the largest customer reward
program in the UK. Warburg Pincus, as a major shareholder, has continually
supported the company's strategy and contributed to this success. All
shareholders strongly believe Aeroplan is the right partner to take the
business forward and successfully realise its next stage of growth. Together
with Aeroplan and the expertise of the current management team, LMG will be
able to pursue international expansion and capitalise on the significant
opportunities in loyalty and data management."
    Joseph Schull, a Warburg Pincus Managing Director and LMG director
commented, "Nectar is a good illustration of our investment approach.  By
backing and engaging as an active partner to a talented entrepreneurial
management team, we helped to build the UK's leading loyalty marketing
business that today serves half of the UK's households and many of the
country's leading retailers. LMG now has an excellent foundation for future
expansion in both the UK and international markets. We wish LMG and its
management, led by Alex Moorhead, continued success with Aeroplan."

    About LMG

    LMG is a privately-held company based in the United Kingdom which
develops, owns and manages large retail-based customer reward programs and
provides customer data driven marketing services to retailers, CPGs and
service providers worldwide. The group owns and operates the Nectar brand, the
United Kingdom's largest customer reward program, and also owns the Air Miles
trademark around the world and has a 20% stake in the Rewards Management
Middle East Limited (RMMEL) which owns and operates Air Miles program in the
Middle East. LMG has appeared in the Sunday Times Top Track 250 companies for
the last three years. It employs approximately 200 staff at its HQ in London,
England and has operations in Newcastle, England and Mumbai, India. For more
information about LMG, please visit www.loyalty.co.uk.

    About Aeroplan

    Aeroplan is an unincorporated, open-ended trust established under the
laws of the Province of Ontario.
    Aeroplan is Canada's premier loyalty marketing company, dedicated to
developing and executing programs designed to engage the loyalty of its
prestigious membership.
    Aeroplan's millions of members earn Aeroplan Miles with its network of
more than 70 world-class partners, representing more than 150 brands in the
financial, retail, and travel sectors. Miles earned may be redeemed for
Aeroplan's industry-leading ClassicFlight Rewards, innovative ClassicPlus
Flight Rewards, and global Star Alliance Flight Rewards, offering travel to
more than 850 destinations worldwide. In 2006 alone, more than 1.4 million
round-trip flight rewards were issued. Aeroplan's roster of non-flight rewards
includes more than 400 exciting specialty, merchandise, and experiential
rewards, as well as hotel and car rental rewards. Members are encouraged to
stay engaged with Aeroplan and avoid mileage expiration due to inactivity by
earning or redeeming Aeroplan Miles at least once in any consecutive
twelve-month period.
    For more information about Aeroplan, please visit www.aeroplan.com.

    About Warburg Pincus

    Warburg Pincus has been a leading private equity investor since 1971. The
firm currently has approximately $23 billion of assets under management in a
range of sectors including technology, media and telecommunications, consumer
and retail, industrial, healthcare, financial services, energy and real
estate.
    Warburg Pincus has raised 12 private equity investment funds which have
invested more than $27 billion in approximately 575 companies in 30 countries.
Technology, media and telecommunications are among the firm's core areas for
investment. The firm has invested more than $10 billion in the sector
globally, of which approximately $2.8 billion has been invested in Europe.
Significant technology, media and telecommunications investments around the
world include Bharti Tele-ventures (BSE: BHARTI.IN), NeuStar (NYSE:   NSR) , MLM
Information Services LLC, and Integra Telecom and Camp Systems International.
Our European portfolio includes Loyalty Management Group, MACH,
Multikabel-Casema-Kabelcom , WNS Global Services (NYSE:   WNS), Fibernet
Communications and easycash. An experienced partner to entrepreneurs seeking
to create and build durable companies with sustainable value, the firm has
offices in Beijing, Frankfurt, Hong Kong, London, Mumbai, New York, San
Francisco, Shanghai and Tokyo. For more information, please visit
www.warburgpincus.com.

    Caution Concerning Forward-Looking Statements

    This news release contains forward-looking statements relating but not
limited to Aeroplan's and LMG's operations, anticipated financial performance
and business prospects. Such statements may involve but are not limited to
comments with respect to strategies, expectations, planned operations or
future actions. Forward-looking statements, by their nature, are based on
assumptions and are subject to important risks and uncertainties. Any
forecasts or forward-looking predictions or statements cannot be relied upon
due to, amongst other things, changing external events and general
uncertainties of the business and its corporate structure. Results indicated
or implied in forward-looking statements may differ materially from actual
results for a number of reasons, including without limitation, loss of a major
partner, travel industry disruptions, significant change in activity usage,
accumulation of Aeroplan Miles and expected reward redemptions, industry
competition, general industry, market and economic conditions, supply and
capacity costs, airline industry changes and increased airline costs, unfunded
future redemption costs, seasonality, employee relations, reliance on key
personnel, technological disruptions, adverse regulatory developments or
proceedings, pending litigation and actions by third parties, restrictions on
certain unitholders and liquidity of the Fund units, as well as the other
factors identified in the "Risks and Uncertainties Affecting the Business"
section of the 2006 MD&A and of the 2007 third quarter MD&A dated November 7,
2007 (available at www.sedar.com). The forward-looking statements contained in
this press release represent Aeroplan's expectations as of December 3, 2007,
and are subject to change after such date. However, Aeroplan disclaims any
intention or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise, except as
required under applicable securities regulations.

    /NOTE TO PHOTO EDITORS: A photo accompanying this release is available on
    the CNW Photo Network and archived at http://photos.newswire.ca.
    Additional archived images are also available on the CNW Photo Archive
    website at http://photos.newswire.ca. Images are free to accredited
    members of the media/




For further information:

For further information: Media: Aeroplan - Canada: Gillian Hewitt, (416)
352 3706, gillian.hewitt@aeroplan.com; Aeroplan - UK: Chris Newman, +44 (0) 77
2504 3100, chris.newman@fleishmaneurope.com; LMG: Megan Ratcliffe, +44 020
7152 4881, m.ratcliffe@loyalty.co.uk; Neil Hedges, +44 020 7544, 3014,
neil.hedges@fishburn-hedges.co.uk; Analysts: Aeroplan / LMG: Trish Moran,
(416) 352 3728, trish.moran@aeroplan.com

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AEROPLAN INCOME FUND

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